London's 'Silicon Roundabout' Off To Uncertain Start

Is there enough "there" there to bootstrap a new Web-based startup culture in London? Sir James Dyson, he of the eponymous vacuum cleaner and venerable U.K. business figure, isn't sure.

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You can get soybean latte with laughable ease in Silicon Valley, Calif. You might struggle a wee bit if you try in the "other" Silicon Valley, the one in what used to be one of Europe's biggest slums: the East End of London.

Being as it is in the middle of one of the world's most ancient capitals, it isn't actually a valley, of course. In fact, it's one of those peculiar Brit traffic configurations, the roundabout, a circular four-way junction. And if the U.K. government has its way, the Silicon Roundabout, as it's called, will be the centre of a vibrant local U.K. high-tech revival.

The new news here isn't that other parts of the world are jealous of America's incredible success wherein academic and entrepreneurial talent has spawned endless remarkable companies and industries on the San Francisco peninsula. After all, even America is jealous of Silicon Valley, with other areas, such as Research Triangle and New York under coder-wannabee Mr. Bloomberg, claiming to host the same kind of talent. It might not, to be frank, even that London, which after all is (despite stiff competition from Frankfurt) Europe's financial centre and which has no shortage of both native and immigrant educated talent of its own, is trying to incubate promising new companies.

What is the new news is just how seriously not just London -- which has its own version of tech convert Bloomberg in the colorful form of its Tory Mayor Boris 'BoJo' Johnson -- but national politicians seem to be taking the idea of Silicon Roundabout, a.k.a. Old Street.

In December, Johnson and U.K. Prime Minister David Cameron detailed plans to make Silicon Roundabout, also called Tech City, "the largest civic space in Europe -- a place for startup companies and the local community to come together and become the next generation of entrepreneurs" via a £50m investment. The pair said the investment will create a destination to support startups, provide classrooms to train entrepreneurs, help young people get the skills they need, and provide a focal point for the area. (Translation: It will help all the London-based potential SAPs, HPs or Oracles that haven't taken off yet.)

The problem is how real all this is and how much of it is either self-delusion or wish fulfillment. Yes, Google has opened a building near the Roundabout, but it doesn't have any technicians or developers in it, with the facility being used mainly as sub-let office space and rooms-for-hire for events and seminars. Yes, there are technology companies here, many of them Web-based. But as it stands, the only one that's achieved any kind of global reach is Mind Candy, the company behind children's online community Moshi Monsters. And yes, the government has supported the opening of a so-called Open Data Institute to foster interest in exploitation of all the public datasets it has been opening up -- or rather, it's offered to match £10m in taxpayer money if private industry comes on board with the same amount, and nearly a year after that announcement no pizza has been delivered as yet to any putative Steve Jobs in any real offices there.

The suspicion that there actually is no "there" there -- as Gertrude Stein once so memorably claimed of Silicon Valley's neighbor, Oakland -- in the Roundabout now has been voiced by a commentator the British take very seriously indeed: industrialist Sir James Dyson, the chap behind the eponymous vacuum cleaner, hand dryer and funky fans.

In an interview in the Radio Times, the now-quaint weekly BBC TV listings publication, Dyson went on record complaining, "There seems to be an obsession with Shoreditch," the postal district where the Roundabout is based, and indeed with "the glamour of Web fads" in general.

Dyson's point wasn't any kind of Luddite objection to anything cyber, by the way. His comments were in the context of sharp criticism of the way the U.K. is falling behind in engineering and science in general: 26% of local engineering graduates fail to go into engineering or technical professions, and 85% of all engineering and science postgraduates in British universities come from outside the U.K. He also derided the fact that a U.K. postgraduate might be seriously offered a "salary" for post-doc research work of £7,000 -- a shade over $11,200. No wonder, he says, that nine in 10 leave the U.K. after they finish their studies: "British knowledge is simply taken abroad."

Should that talent instead be heading to Silicon Roundabout? There's no shortage of desire or goodwill here to get Britain out of financial services, which dominates the current national economic mix in the eyes of the government, where there is much talk about "rebalancing" the economy to make up for the long-term neglect of manufacturing. But is this the right way to get cool new technology companies that can sell goods to the world and create high-paying jobs?

The jury is most definitely still out on that. Everywhere, perhaps, other than in BoJo's tousled blond head.

Tech spending is looking up, but IT must focus more on customers and less on internal systems. Also in the all-digital Outlook 2013 issue of InformationWeek: Five painless rules for encryption. (Free registration required.)